Scaling Improved Cookstove Companies | MIT D-Lab 2017

Report from
Uganda
SCALING
IMPROVED
COOKSTOVE
COMPANIES
Summary Report

Macauley Kenney
Eric Verploegen
MIT D-Lab
 Scaling Improved Cookstove Companies | MIT D-Lab 2017

MIT D-Lab
Designing for a more equitable world ACKNOWLEDGEMENTS
MIT D-Lab works with people around the world to develop and
This research was conducted out
advance collaborative approaches and practical solutions to global
of the Off-Grid Energy group in
poverty challenges. The program’s mission is pursued through in-
the MIT D-Lab. D-Lab is a Cam-
terdisciplinary courses, research in collaboration with global part-
bridge-based initiative that works
ners, technology development, and community initiatives — all of
in communities around the world to
which emphasize experiential learning, real-world projects, com-
combat global poverty challenges.
munity-led development, and scalability.
The organization has been involved
with in clean cooking technologies
MIT D-Lab Off-Grid Energy Group since the early 2000s, and has
A global network of local innovators using design & conducted extensive research on
technology to address poverty improved cookstove technology in
D-Lab’s Off-Grid Energy Group works to address energy access East Africa
challenges by providing local organizations the tools to identify the
most pressing needs and market opportunities in a specific com- The authors would like to acknowl-
munity or region. We develop publicly available resources, convene edge the following people for their
stakeholders, and work directly with local organizations to design support and assistance, without
and implement programs that increase access to renewable energy which this report would have been
solutions, such as efficient cookstoves, solar lighting, water pumps, impossible: Nancy Adams, Anish
and mechanical devices for increased productivity. Antony, Elizabeth Hoffecker, Deirdre
Dupree, Vahid Jahangiri, Nai Kale-
MIT D-Lab Work in Clean Cooking ma, Fred Oloka, Daniel Sweeney,
and the D-Lab community at large.
D-Lab supports the adoption of clean cooking through:
» Evaluation of existing fuel and stove technology We would also like to extend our
» Design of advanced technologies gratitude to our case study partic-
ipants: Helen Ekolu Acuku, Moses
» Support for clean cooking ventures
Amone, David Gerard, Betty Ikalany,
» Participation in international policy on quality, availability, and
Vincent Kienzler, Nolbert Muhumu-
adoption of clean cooking technology
za, Adeline Muheebwa, and Fred
The research team has been engaged in clean cooking technologies Rwashana for welcoming us into
for 15 years, and continues to work on methodologies to measure the their establishments and sharing
performance and outcomes of fuel and ICS. their ventures with us, and to all of
Prior to this research initiative, MIT D-Lab had worked with two of our interview participants for gra-
the case study businesses, Appropriate Energy Saving Technology ciously donating their time.
and GreenBio Energy, to provide technical support, and had provid-
Financial support for this initiative
ed grants to both of these companies and to Awamu Biomass Energy.
was generously provided by the
MIT-SUTD collaboration through the
MIT D-LAB graduate research grant program.
Massachusetts Institute of Technology
MIT N51, 3rd floor
265 Massachusetts Avenue For further information contact:
Cambridge, MA 02139 USA Macauley Kenney macauley@mit.edu
Eric Verploegen ericv@mit.edu
d-lab.mit.edu
 Scaling Improved Cookstove Companies | MIT D-Lab 2017

Purpose Minimizing Risk by Increasing Internal Capacity

Billions of people around the globe use solid biomass to fuel their
daily cooking needs. Most traditional cooking practices, such as
three stone fires, produce hazardous emissions, damaging the
health of the users (primarily women and girls) and contributing to
global air pollution. Improved cookstoves (ICSs) have great poten-
tial to reduce the negative effects of cooking emissions, and prod-
ucts are applicable to potential users ranging from rural villagers
to high-end consumers. However, despite the high potential for
social impact, ICS manufacturers and distributors struggle with low
margins, poor customer adoption, and lagging business growth
(Global Alliance for Clean Cookstoves, 2015). This is particularly true
in Uganda, where there is an estimated market for 6 million clean
cookstoves but the sector is very nascent, with few large-scale
manufactures and distributors (World Bank, 2015).
To facilitate growth of the ICS market the MIT Off-Grid Energy group
conducted a research study of Ugandan ICS businesses, including
in five in-depth case studies. The goals were to analyze how, if at
all, the growth of these businesses depended upon the expertise
and resources of the founding team. We use this analysis to sug-
gest a low-risk pathway for ICS business growth, and to identify the
challenges ICS companies may face when scaling along this path-
way. We hope that with this knowledge ICS business owners will
be better prepared to bring their ventures to scale, and supporting
NGOs, investors, and government agencies will be better equipped
to facilitate the scaling process.
A company’s internal capacity (IC) is the ability to address the busi-
ness’ needs, and is comprised of:
» Business proficiency (expertise related to: financial manage-
ment, product technology, product sourcing and/or manufac-
turing, distribution, and sales)
» Financial resources (revenue, grants, equity investment, debt
financing, and carbon financing)
A high level of IC allows a company to build out its operations and
scale safely, or to stabilize existing operations. IC is gained through
the human capital of the company, which brings personal experienc-
es, education, and professional networks, all of which can be lever-
aged to increase business proficiency and financial resources. Finan-
cial resources can also be increased through revenue generation and
personal finances
In order to be operationally viable an ICS company has to have both
business proficiencies in each of the components of BC and the fi-
nancial resources to act on that knowledge. The two are intercon-
nected: financial resources allow companies to afford employees
with high levels of business proficiency, and high levels of business
proficiency can facilitate access to, and efficient allocation of, finan-
cial resources.

Minimizing Risk by Decreasing Business Complexity HUMAN INTERNAL BUSINESS

Scaling an improved cookstove (ICS) company without exposure to CAPITAL CAPACITY NEEDS
high levels of risk requires the company to conduct operations in:
» Financial management
Organized
Finances
» Product technology Business
Experience

4 4
» Product sourcing and/or manufacturing Proficiency Technical
Education Knowledge
» Distribution and sales
Financial Manufacturing
The number and intricacy of operations that must be met for these Network Resources /Sourcing
components to operate efficiently is the company’s business complex-
ity (BC). Distribution
and Sales
To decrease vulnerability, company leaders should attempt to minimize
risk while scaling. One mechanism of doing so is to minimize the com-
plexity of their business, which reduces the number of potential hazards
that could cause an operational upset. Mechanisms to minimize com-
Human capital (experience, education, and network) comprises
plexity include: company IC (business proficiency and financial resources), which is
necessary to meet the functional needs of the business (organized
» Outsourcing part of the cookstove manufacturing and/or distri- finances, technical knowledge, product sourcing, distribution and
bution processes (i.e. not vertically integrating) sales). Revenue from sales can also increase financial resources.
» Relying on contract labor that can fluctuate with customer
demand
» Reducing product complexity
Reducing distribution, sales, and marketing activities can also minimize
complexity, but potentially hinder sales and revenue growth.
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 Scaling Improved Cookstove Companies | MIT D-Lab 2017
Building Business Proficiency in the ICS Sector
Business proficiency is particularly critical in the early stages of com-
pany development. While financial resources are a valuable and
necessary component of internal capacity, knowledge in business
strategy, financial models, distribution techniques, and manufactur-
ing is arguably more necessary to ensure those limited resources are
effectively allocated.
Unfortunately, the need for business proficiency is often overlooked
and there is insufficiently support for increasing business proficiency
in the Ugandan ICS sector. The company leaders we engaged with
were less likely to identify weaknesses in their personal competen-
cies than their funding strategies, and those that did found it difficult
to remedy weaknesses in expertise. Work or school opportunities
that provide this experience are limited in Uganda; most establish-
ments/organizations/individuals that offer mentorship are located
in Western markets and are not accessible from Uganda. This lack of
resources disproportionally effects founders who have less formal
education or international networks to draw upon, a demographic
that consists of more local founders than international.
Additional capacity building programs, professional mentors, and
university collaborations in the Ugandan sector are all potential
mechanisms to remedy this deficit, particularly those that support
more than “investment ready-ness” by providing information on
non-investment related topics such as distribution channel strate-
gies, bookkeeping skills, employee management, etc. These mech-
anisms do not have to come exclusively from the international
community, but a strong international presence could be of use as
national capacity grows.
Figure 1: Nolbert Muhumuza demonstrates an early version of a TLUD stove in Awamu’s production facility.
Advantage for International Founders
International founders may begin their venture with a high level of
internal capacity because of the greater amount of capacity-build-
ing opportunities in Western society such as conferences, online
resources, and higher education opportunities. The international
founding teams in our study needed less assistance improving their
business proficiency, as they already had that capacity, and instead
were able to spend their resources aggressively engaging in market-
ing and sales, which allowed them to grow more quickly than their
local peers.
Companies that demonstrate a high level of internal capacity, and
subsequently a lower level of risk, are more competitive applicants
for large contracts and grants. Securing contracts and grants increas-
es financial resources, which helps the business to grow, which fur-
ther increases their competitiveness in gaining future contracts and
grants. Local founders, who often may not have extensive business
proficiency or have the support to increase their proficiency, are ef-
fectively excluded from participating in this positive feedback cycle.
An additional consideration is that international founders, particular-
ly those with no personal or familial ties to the region their venture
operates in, enter into the market with a “boom or bust” mentality.
That is, they set more aggressive scaling timelines ventures than lo-
cal founding teams because they do not intend to stay in the region
if the venture is not able to grow. In contrast, local founders who are
personally established in the region may not share this urgency be-
cause they do not plan to depart if the venture fails, allowing them to
tolerate lengthier scaling timelines.
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 Scaling Improved Cookstove Companies | MIT D-Lab 2017

Recommendations REFERENCES
When looking to grow ICS companies in Uganda, founders, manag- Global Alliance for Clean Cookstoves. (2015). Increasing Invest-
ers, and organizations looking to support these businesses, should ment in the Clean Cooking Sector. Retrieved from http://clean-
assess the company’s internal capacity and business complexity. cookstoves.org/resources_files/alliance-strategy-drive-invest-
Strategic decision-making can be informed by the identification of ment.pdf
where complexity exceeds capacity (i.e. in finances, product sourc-
ing, distribution and sales), and whether expertise or financial re-
sources would facilitate growth. Very often, the companies will World Bank. (2015). Project Information Document (Uganda
require both at the same time. In those scenarios it is important to Clean Cooking Supply Chain Expansion Project No. PIDC17014).
exercise judgment on the ability of the company to efficiently utilize Retrieved from http://projects.worldbank.org/P153679?lang=en
funding without business proficiency. It is very possible that the ex-
ternal funds without business proficiency will not be impactful.
The companies in this study with full time international founders
possessed higher levels of business proficiency and access to finan-
cial resources than those with local founding teams, in part due to
western education and international networks, and were able to
scale more quickly. This trend does not mean that all international
teams are similarly enabled, or that local founding teams do not en- ABOUT THE AUTHORS
ter in with high levels of business proficiency or financial resources,
but it does suggest that an increase in business proficiency might MACAULEY KENNEY HOLDS A MASTER’S IN TECHNOLOGY AND POLICY FROM MIT,
benefit a higher proportion of local founding teams. AND A BACHELOR’S IN BIOMEDICAL ENGINEERING FROM WORCESTER POLYTECH-
Company leaders without strong business proficiency should seek NIC INSTITUTE. SHE IS A CO-FOUNDER OF THE RWANDAN BROKERAGE KUMWE
to gain additional capacity before looking to increase business com- LOGISTICS, AND SERVES AS A BOARD MEMBER FOR THE INSTITUTE OF ENGINEERING
plexity and grow.
AND TECHNOLOGY. SHE SERVED AS A RESEARCH FELLOW AT MIT’S D-LAB FROM
Methods of building business proficiency include: 2016-2017 LEADING THIS RESEARCH INITIATIVE ON THE IMPACT OF THE FOUND-
» Participating in external business training programs (ex: accel- ING TEAM ON THE GROWTH OF IMPROVED COOKSTOVE COMPANIES.MACAULEY HAS
erators, incubators, etc.) A PERSONAL INTEREST IN DATA-DRIVEN INTERNATIONAL DEVELOPMENT PROJECTS,
» Implementing internal business training programs (ex: train- PARTICULARLY THOSE FOCUSED ON ENTREPRENEURSHIP.
ing for new employees)
» Utilizing available online business resources
ERIC VERPLOEGEN, WHO LEADS THE MIT D-LAB OFF-GRID ENERGY GROUP,
» Hiring experienced employees
JOINED MIT D-LAB IN 2014 TO EXPAND ITS RESEARCH EFFORTS IN THE AREA OF
» Participating in local business chapters and online communi-
OFF-GRID ENERGY. HE HAS A BACKGROUND IN MATERIALS SCIENCE AND EARNED A
ties to attract attention and support from ecosystem enablers
DOCTORATE IN POLYMER SCIENCE AND TECHNOLOGY FROM MIT IN 2008. PRIOR
(ex: joining a clean cooking association, maintaining a compa-
ny website, and creating an online presence) TO D-LAB, HE WORKED ON DEVELOPING MATERIALS FOR SOLAR CELLS AND WASTE

Organizations supporting the ICS sector could have a great impact REMEDIATION SYSTEMS FOR THE OIL AND GAS INDUSTRY. HE IS PASSIONATE ABOUT

by increasing the number of capacity-building services available to HELPING ORGANIZATIONS BASED IN OFF-GRID REGIONS IDENTIFY TECHNOLOGIES,
these leaders. PRODUCTS AND DISTRIBUTION STRATEGIES TO INCREASE ENERGY ACCESS IN THEIR

Some examples of potentially beneficial programs include:

» Training/mentoring programs
» Technical support Peer-to-peer knowledge sharing
» Incubators/Accelerators